Qatar construction sector faces rising costs, materials shortage

The ongoing diplomatic rift in the Gulf will have a severe impact on Qatar’s construction sector, an industry expert has told Big Project ME.

Saudi Arabia, the UAE, Egypt and Bahrain earlier this week severed diplomatic ties with Qatar and blockaded its borders, with several other nations also cutting relations with Doha over allegations it supports extremist groups.

In an emailed statement, Gary Tracey, associate director – Project and Development Services, MENA for Jones Lang LaSalle, said that the cost of building materials and the tender price index will increase. Furthermore, contractors will face increased risk on projects in the country.

“Most materials are delivered to Qatar from KSA and they have now cut off ties through land, air and sea. Qatar do not have many other alternatives for supply in the GCC / Middle East only Oman, Kuwait and Iran,” Tracey said.

“However, these three countries mostly import materials and will not solve the short to medium term demand of materials Qatar will need to fulfill its existing construction projects. International contractors and consultants will increase their fees considerably due to many staff living in the UAE and flying in and out each week. This is now more difficult after the announcement.”

Finally, Tracey also warned that the diplomatic spat could have major repercussions on Qatar’s ability to deliver the infrastructure projects required for the 2022 FIFA World Cup.

A report in The Guardian citied an unnamed source from the Supreme Committee, which is responsible for building the 2022 World Cup facilities, as saying that the seriousness of the current situation was greater than any of the formidable challenges Qatar has faced since winning the vote in 2010.

“We believe this will have a severe impact on the government’s ability to deliver the World Cup 2022 infrastructure projects on time and may result in Qatar losing the 2022 World Cup,” Tracey told Big Project ME.